Barriers and Opportunities for Enhancing Capital Flows
In the COMCEC Member Countries
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bank. No permission is needed for remittances of dividend income to non-residents on their
investments in Bangladesh.
A number of foreign companies have made high-profile investments in Bangladesh in recent
years. In the telecommunications sector alone, these include Bharti Airtel of India, Singapore
Telecommunications, Global Telecom Holding of Egypt (formerly Orascom Telecom Holding),
Telenor of Norway, and Warid Telecom International, which is based in Abu Dhabi.
Besides these successes, there have been a number of high-profile failures. These include the
decision by India’s Tata Group to suspend discussions over a US$3bn investment programme
because of the failure to reach decisions on key issues; and the suspension of Asia Energy’s
share listing in London after the government of Bangladesh announced the suspensions of the
company’s operating licence in Bangladesh. Confidence has been dented by the failure of
efforts to sell the state-owned Rupali Bank to Prince Bandar bin Sultan bin Abdulaziz al Saud of
Saudi Arabia in 2007; and by the withdrawal of US$1.2bn in loans for a US$3bn bridge across
the Padma River.
Institutions overseeing capital flows
A number of Bangladeshi stakeholders and institutions have an interest in, or responsibility
for, the country’s capital flows. These include the BB, which fulfils the routine functions of a
central bank, including the formulation and implementation of monetary and credit policies,
the regulation and supervision of financial institutions, and the implementation of the Foreign
Exchange Regulation Act. It is independent, but the Ministry of Finance holds considerable
sway in regulating the country’s nascent capital markets. The Bangladesh Securities and
Exchange Commission, in practice answerable to the finance ministry, is the country’s capital
market regulator.
For its part, the finance ministry is one of the most powerful ministries in Bangladesh. The
ministry’s Bank and Financial Institutions Division (BFID) deals with law and policy issues
related to banks, non-bank financial companies (NBFCs), capital markets, and the insurance
and microcredit sectors. The BFID also co-ordinates the formulation and review of policies.
Other responsibilities include monitoring the utilisation of foreign loans and other types of
assistance.
A further stakeholder is the Board of Investment, which is attached to the prime minister’s
office. Its official mandate is “to promote and facilitate investment in the private sector both
from domestic and overseas sources with a view to contribute to the socio-economic
development of Bangladesh”. Much of its activity to date has centred around dealing with
procedural issues related to the raising of foreign capital by domestic firms.
The Investment Corporation of Bangladesh (ICB) is tasked with developing the country’s
capital markets. In practice it appears to focus on promoting Bangladeshi investments among
the Bangladeshi diaspora. The ICB’s subsidiary ICB Asset Management Company Limited
launched the ICB AMCL First non-resident Bangladeshi (NRB) Mutual Fund in March 2007. The
total issue size was Tk100m (US$1.3m). More recently, the ICB has been involved in
developing another fund, the Bangladesh Fund, with an initial size of US$640m.